A vacant lot sits between two houses on a residential street. The vegetation is a bit overgrown but otherwise unremarkable. It helps keep the street from being an unbroken string of single-family homes or duplexes, and contributes to the middle-class, neighborhood vibe.
Nothing wrong with that, but at a time when there aren’t enough homes for all the people who would like to buy one at a price they can afford, this asset might get put to a more productive use. For example, it could become a new home for a family ready to buy one. Or maybe more than one family – a duplex or triplex, smaller than 1,000 square feet and cheaper to build and therefore affordable to middle-income buyers. It could be that long-sought-after “starter home.”
It’s hardly new – empty lots have been transformed into homes forever.
But when many larger-scale housing developments run into zoning issues, pushback from would-be neighbors, and other issues like construction costs, labor costs, or mortgage rates, the idea of “gentle infill” – building homes in those vacant lots that fit into the existing character of the neighborhood – may be one way to make a dent in the nation’s housing shortage.
Tested in a Big City
It won’t change a community’s housing shortage overnight, but it’s one solution among many others when it comes to scaling up new housing construction. It may also dodge the “Nimby” bullet, and empty lots don’t pay much in property taxes. One with a home does.
That was one observation Tim Corcoran, the Director of Planning and Community Resources of South Bend, Indiana, noted while reflecting on the progress of the last three or four years. In that time, over 500 new homes have been constructed in this midwestern town. Last year, for the first time in decades, more homes were built in South Bend than in the rest of the county in which South Bend sits, he said.
“It was really prompted by a couple of things – one is that we have a lot of vacant lots that are not financially productive for the city,” he said. “Yet we have the streets, and we have the infrastructure in these neighborhoods, but not the people and the houses utilizing that infrastructure.”
About four years ago, the city of South Bend began to boost its efforts to develop vacant lots it owned. They partnered with local nonprofit organizations to advance the effort. The revitalization push was a chance to encourage and support small-scale home builders and developers to help them navigate both the construction and zoning aspects. It was a bit of a leap of faith on the part of city officials to use public dollars to work with folks who had possibly never built a home before, but it turned out well, he said.
Other elements were also important. One was a set of off-the-shelf designs from which the new builders could choose, which were pre-approved. Once a design was chosen and the infrastructure connections set, such as those for water and sewer service, they were good to go. Easing the pathway to a quick approval can’t be underestimated as a factor in building new housing, Corcoran said.
“If you’re really genuine about helping address the housing crisis in your town, then you really need to look at the approval process very closely,” he said. “Each department doesn’t necessarily know what the issues are in a different department – planning versus engineering versus the fire department – these are often siloed departments, and you can imagine when a developer is going through each of these steps, it probably feels like a lot of regulatory brain damage that they have to go through just to get a house approved.”
With the catalogue South Bend created, housing developers have choices of single-family, duplexes, and larger homes across 10 different designs, each with three façade options. This approach – pre-approved designs tailored to allow small-scale developers and even do-it-yourselfers to pound the nails and get housing built – is one that other communities, such as Kalamazoo, Michigan, have jumped on as well. Vermont is now trying it on a statewide basis.
Open sections of land might be locations for infill housing in established neighborhoods in existing communities, or on a town’s edges. (Photo by Andrew McKeever / The Daily Yonder)
Vermont Is Testing the Waters
Like many states, Vermont has a housing shortage. The state has set a goal of building 30,000 new homes by 2030, which may be ambitious but testifies to the perceived need, especially in the workforce, or “missing middle” sector of the housing market, the space in between state or federally subsidized housing, and higher-end, expensive housing that’s affordable only for those with substantial financial means.
But while there’s near-universal agreement that more affordable workforce-missing middle housing is needed, there are obstacles to overcome.
The state has, on average, one of the largest minimum lot size requirements of any state in the nation, with many rural towns requiring somewhere between one and five-acre lots before construction can be permitted. Even in small communities, a minimum lot size of half an acre is often required, although recent legislation is bringing more flexibility. Legacy land use regulations, passed decades ago when the state was coping with a development push that threatened local hillsides and mountains with fragmentation, have also been a factor, sending many projects to a judicial review that costs time and money.
Housing shortages have a wide-ranging effect. It impacts employers seeking employees, who may want the job on offer and be a great fit, but have to decline it because they can’t afford the available housing. It prices out younger residents. Older homeowners, who may be ready to downsize to a smaller home, can’t afford to.
The large home they retain, which worked well when the nest was full, can’t be turned over to a younger family because it doesn’t make financial sense, even if those seniors who might prefer having everything on one floor, in a smaller dwelling that’s less expensive to heat and cool.
In response, Vermont, one of the nation’s most rural states, has launched “Homes For All,” which is aimed at expanding the network of small-scale developers statewide and providing resources to support missing middle housing.
A portion of Homes for All, known as 802 Homes, aims to develop 10 community-tested, locally pre-permitted home designs for small developers to speed up the process from site selection to move-in day. These designs are thoughtfully designed to match Vermont’s local vernacular architecture, and are adaptable for smaller or irregular lots.
Teams from the state’s Department of Housing and Community Development have been testing the waters for the past three years, making field trips out to several communities, to see if lots were available for new houses designed to fit in locally and if the concept would actually work.
The process advanced further in 2025, as three communities in different parts of the state were selected for a pilot project to see what the remaining friction points were in the permitting or zoning process. Across the ten home designs, there are options for a variety of families and housing needs – from seniors looking to downsize to smaller homes to young families looking to get started.
And now, a third phase of the project is underway. A catalogue of ready-to-build home designs intended to make housing easier, faster, and more affordable has been developed. A statewide survey is being launched to test the waters around whether those designs fit in with the historic norms and meet current housing needs.
There are three parts to Homes for All, said Jeff Dube, the community planner and project manager with the state’s housing department.
One is a “Design and Do” toolkit containing builder workbooks, design resources, and community case studies for those missing middle homes. Then there’s the small-scale developer training program, where lessons from the toolkit come to life through a series of training and technical assistance programs to help small-scale developers. Finally, there’s the catalogue of “802 Homes” (the state’s one and only telephone area code is 802), 10 pre-permitted designs adaptable for local context, ranging from single-family dwelling units to four-plexes.
The project also attempts to attack costs as well as permitting by pointing developers in the direction of manufactured homes. “Stick-built” is fine, but the catalogue notes that the manufactured homes component parts, shipped to the job site, can often be assembled in as little as two weeks, which can dramatically reduce the construction timeline and may translate into big savings on construction costs. They hope to have the catalogue ready by the end of this year, as they fine-tune it and lean into more community engagement, from which new ideas are steadily coming to influence the housing designs.
The 802 Homes catalogue showcases 10 pre-permitted designs adaptable for local context. (Courtesy Vermont Agency of Commerce and Community Development)
“I think one of the most exciting things about the 802 Homes Catalog is we’re looking to support the way homes are currently being built with traditional stick-built framing, platform framing, but also looking to the future of home building and construction in Vermont and nationwide,” Dube said.
“So each of the 10 home designs will be documented two ways: stick-built or for off-site construction, and this will accommodate the wide array of off-site construction methods in Vermont and Northern New England currently.”
One housing developer they know in Vermont can construct a home off-site in about 96-hours and make it water-tight on-site within 5 hours. From there, it’s about a month’s work to finish before it’s move-in-ready, Dube said.
And it may also open up the home construction trade to a whole new group of people ready and willing to build indoors, where the physical demands are lessened. There’s also more consistent quality and less waste, he said. he pre-approved designs should ease the permitting process, making it more predictable and speedy.
“There will always be the need for some sort of site review process at the local level,” he said. “What we’re hoping to do is to remove as many barriers as we can.”
Mounting Costs
For Jonah Richard, a housing developer based in Fairlee, Vermont, a small town of about 1,000 people on the border with New Hampshire, the main issue constraining housing construction is construction costs.
In 2020, he relocated back to his hometown from New York City to launch his development and construction business. They focus on infill projects, but mostly in the village centers of Fairlee and other nearby small towns. Finding labor and workers hasn’t been too hard — it helps to be from the area and have some local connections.
But they don’t come inexpensively. His construction costs are probably not much different from development companies in larger towns and cities in Vermont (cities are a relative term here, with Burlington, the state’s largest city, having a population of about 45,000 residents), but the rents and mortgages the locals might be able to pay aren’t as high as the city dwellers are used to.
“So you have an even smaller tolerance for what those construction costs can be,” he said. “If you can’t hit a certain target, then you’re not going to have a financially feasible project. So the struggle is always getting those numbers to work, and largely what we’ve done in the past is rely on some sort of subsidy, whether that’s state or federal. You know, doing affordable housing projects, you’re going to have some subsidy component, but that comes with its own difficulties and red tape.”
Zoning is less of a problem. A bigger one is connecting with sewer and water resources, he said.
“Most of the towns don’t have sewer that we’re working in, so you have a private septic system. That introduces complexity and lot size constraints,” he said. “If you don’t have a water supply, then you’ve got to do a well, which is a whole other can of worms.”
But when it comes to the permitting, it’s been more or less straightforward. One or two visits to the zoning board have usually been enough to get through that, he said. Working in small towns does have its benefits.
He’s been following the Homes For All project, and may use it when the home designs through 802 Homes come out, and it might help with architectural and design costs, but zoning is less of an issue, he said.
By the end of the year, the catalogue of home designs should be finished and free and available for developers and communities to work with. And maybe not just one home at a time, here and there, but it could also lead to a whole new neighborhood, one designed to fit in with its broader surroundings.
What they are hoping to achieve is to offer a set of construction documents that will ratchet down development costs, Jeff Dube, the community planner, said. Currently, there is draft legislation in Vermont that would allow the Treasurer to explore how bulk-purchasing off-site built homes could work in the context of 802 Homes or other housing programs. This could help reduce costs and stabilize supply chains for off-site manufacturers if we were able to aggregate demand for units, Dube added.
Would this model work for rural areas located outside of main downtown or village centers? Maybe, although that would require drilling individual wells and developing septic systems not tied into municipal ones, adding to the overall costs.. So far, the infill process has focused on town or village centers, Dube said.
“Most of our Vermont communities are based around some sort of center,” he said. “So to the extent that we can add housing units around those centers, we can support economic development of businesses, whether present or future, in those centers to grow and thrive as well.”
Other advantages include enhanced walkability in those neighborhoods, and enabling seniors to downsize to smaller homes, and obtain better access to transportation and other services, such as local stores and pharmacies, he said.
Manufactured Homes as Cost Remedy
Matt Littell of Utile, a founding principal of a Boston-based architectural and planning firm that is working with the Vermont Department of Housing on the infill project, agreed that the cost of development was the biggest challenge to overcome, based on the feedback they’ve been hearing at some of the community engagement meetings they have hosted. That’s where the manufactured homes could really move the needle, he said.
“So what we’ve really been doing in terms of the design is really digging down to find more and more efficiencies in those designs. So it’s things as simple as just lining up the plumbing from one wall to another to minimize every amount of work that a tradesperson might do, and to just make these buildings as efficient as we possibly can,” he said.
Another solution from Vermont intended to help speed new housing construction is the Community and Housing Infrastructure Program (CHIP) Act, passed by the state legislature in 2025.
The intent of the legislation is to encourage the development of low and moderately priced homes in both towns and rural areas that would not have been built but for the infrastructure improvements funded by the program. CHIP enables municipalities to finance essential infrastructure (like water, sewer, roads, and stormwater systems) that supports new housing development.
The basic idea behind CHIP is similar to other tax increment financing (TIF) mechanisms that have been in the commercial and residential development space for a while. Essentially, a community that wants to support a housing project through infrastructure improvements can pay for the cost of that work – if the application is approved by the state government – by borrowing from future anticipated revenue growth the community will realize from the higher property values, and paying that back later when the tax dollars from those improved properties arrive in the town office.
The project need not necessarily be entirely for housing, but at least 60% of the floor area of the project must be dedicated to housing for primary residents. The program launched in Vermont in January, 2026, and up to $2 billion can be invested in housing between now and 2035.
Finding ways to cut the costs a would-be developer or home builder faces at a time when construction costs often outpace the pocketbooks of the would-be homeowner is key, said Alex Farrell, the state’s housing commissioner.
“Now, we were still faced with this conundrum that investment in housing is really expensive,” he said. “And one of the drivers of that is the infrastructure. Decades ago, municipalities could front that cost. We know our municipalities can’t do that now. That’s where CHIP came in.”
A big part of the challenge lies in the cultural side, in addition to cracking the code on the construction costs, Jeff Dube said.
“We really needed to just reintroduce this style of housing to Vermont communities and get people more willing to say yes to development in their backyard,” he said. “With the phase one toolkit, we worked with five communities to understand what houses they would say yes to in their backyards and really start to get excited about.”
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